If it’s your first time shopping for life insurance, there’s a good chance you may not know which option is the right one for you. Finding the best match requires some homework before you make your choice. Here’s a breakdown of the various life insurance options to help you figure out which one fits best. (Three separate blog posts.)
Term life insurance
Term life insurance has level premiums that last for a set number of years (the term). This life insurance includes a death benefit in the form of a lump sum of cash that’s paid out to a beneficiary by the life insurance company if you die while this coverage is active. This lump sum can be used for a variety of things, such as burial expenses, mortgage, and debt payments, living expenses for your family, or donations, generally tax-free. Additionally, you may have the option to convert your policy to permanent coverage before the term ends. After the term expires the policy may either terminate or automatically renew annually. If your policy is slated to terminate at the end of the term period, then in order to continue the coverage you may renew for another term or shop for a new policy.
Policy highlights
- It provides a generally tax-free death benefit for your loved ones.
- Easy-to-understand.
- Typically low-cost life insurance.
Is a term life insurance policy right for me?
Term life insurance is a great choice for most life insurance shoppers because it’s simple and cost-effective. If you’re on a tight budget, or you’re a young person age 20-30 who is just starting to build your financial future, term life insurance can be a good match for you.
Still not sure? Check out the video below to learn more about term life insurance.